08 January 2010

7 Advantages of Outsourcing Your Business Operations

The advantages of outsourcing include the following: it allows the company to concentrate on its primary activities, it makes way for efficiency with cost savings, it lessens operating costs, it controls the company’s operations, it permits employment flexibility, it maintains continuity and reduces risk, and it provides assistance in terms of skills.

Outsourcing is a big help to many companies. It is an effective means of making a firm grow while reducing costs. In fact, outsourcing has given numerous benefits to different departments of an organization. A human resources department, for instance, would have a huge demand for HR staffing that is easily possible through HR Outsourcing. The overall success of an organization can be attributed to subcontracting that brings about financial savings and a number of advantages in the operations of its every component.

Outsourcing allows the company to concentrate on its primary activities

The fast growth of a company can result in a higher demand for staffing and add strain to the human resources and financial departments. By outsourcing, the company is able to maintain its primary activities, which is to render services and quality without having to forgo excellent performance from back-office operations. Example: a company has acquired a contract that will drastically increase purchasing requirements for a short period. The solution would be to temporarily outsource the additional purchasing operations, so as not to overwork current purchasing staff whose hands are already filled with important tasks and responsibilities.

Outsourcing makes way for efficiency and cost savings

Back-office functions with a complex nature should outsource when the size of its company is not capable of consistently performing all of their functions at an affordable cost. For example, when a doctor's office needs to accommodate various insurance plans but has only one personnel to meet all requirements of several providers, they could outsource responsibilities to a firm that is dedicated to doing medical billings. This can save on costs on the part of the doctor, considering he only has a small clinic that cannot afford to pay for lots of staff while at the same time allowing the clinic to continue accepting all of the patients’ insurances.

Outsourcing lessens operating costs

Outsourcing lessens operating costs, especially for a growing company. As the firm grows, so does the need for more people and more office space. Considering that there is no way to expand the office due to limited space, and that the only way to expand is to move to a bigger, yet more expensive location, which would prompt you to either move and expect a higher overhead cost. Conversely, the business could outsource instead, which would provide the right work force for some specific simple functions and reduce the overall operating costs. Take the case of data entry or telemarketing tasks. These can be easily outsourced.

Outsourcing controls the company’s operations

Certain operations that have seemingly unmanageable costs are often recommended for outsourcing. An outsourcing agreement for an information technology division, for instance, that has an extreme load of projects and a high budget but without sufficient staff to complete requirements could bring stability and control to the company by outsourcing the extra projects and bring the entire company a more stable income in the long run.

Outsourcing permits employment flexibility

Seasonal operations or departments with demands per cycle basis would very much need to outsource. It allows the company to outsource when more staff is needed for a specified period, and release the additional help when the entire work has been accomplished. A good example would be during the accounting department’s tax and auditing operations that happen only on certain periods. Outsourcing provides the additional resources for a given period of time at a fixed cost.

Outsourcing maintains continuity and reduces risk

A company is guaranteed a certain level of continuity when outsourcing specific operations. A business is less likely to face any problems relating to possible conditions of high turnover in labor force. At the same time, the company is secured that these outsourced personnel resources have lower risks of providing substandard output to the organization.

Outsourcing provides assistance in terms of skills

In certain situations, a company might require skills that the current staff does not have. On-site outsourcing is the solution. Outsourced people will come into the company to work with its personnel and eventually will provide them with a new set of skills needed by the organization. This becomes most helpful when a company needs an equipment upgrade. It is possible that the current engineers are not well versed of the new technology being introduced. Calling for outsourced engineers to do on-site work with them will help them gain the new set of skills needed.